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Income Tax Appellate Tribunal, MUMBAI BENCHES “E”, MUMBAI
Before: SHRI D. KARUNAKARA. RAO (AM) & SHRI RAM LAL
O R D E R
PER RAM LAL NEGI, JM
This appeal has been preferred by the assessee against order dated 20/11/2013 passed by the Ld. CIT (Appeals)- 23, Mumbai, for the assessment year 2009-10, whereby the Ld. CIT(A) has partly allowed the appeal filed by the assessee against assessment order passed u/s 143(3) of the Income Tax Act. 1961(for short ‘the Act’)
Brief facts of the case are that the assessee a Co-operative Housing Society, engaged in managing, maintaining and administering the property of the society and raising funds for the benefit of its members filed its return of 2 Assessment Year: 2009-2010 income declaring the total income of Rs. 18,14,018/-. The return was processed and notice u/s 143 (2) and 142 (1) of the Act were issued and in response thereof the authorized representative of the assessee filed the details called for. It was noticed that the assessee had offered the amount of Rs. 2,66,282/- received from BPL Mobile Communication Ltd. and Sify Ltd. under the head ‘income from house property’ and claim deduction u/s 24 of the Act. Hence, the AO asked the assessee as to why the compensation received from BPL Mobile and Sify Ltd. should not be taxed as ‘income from other sources’ and the claim of deduction u/s 24 should not be disallowed. After receiving reply from the assessee the AO following the decision of Commissioner of Income tax-12, passed in the assessee’s own case for the A.Y. 2005-06 treated the compensation received from the said parties as ‘income from other sources’ and also denied the deduction claimed u/s 24 of the Act.
3. Feeling aggrieved by the assessment order, the assessee challenged the same before the Ld. CIT(A). The Ld. CIT(A) after hearing the assessee partly allowed the appeal.
Still aggrieved, the assessee has preferred the present appeal before the tribunal on the following effective grounds:-
1. “The learned CIT (A) erred in computing the income of service charges received on letting of premises under the head ‘Income from Other Sources’ instead of ‘Income from House Property.’
2. The learned CIT (A) erred in not considering the fact that there were two separate agreements one for letting of premises and another for the services in the nature of providing the amenities, car parking space, cleaning and sweeping facility including the use of lift and other services and both the agreements were executed and terminates on the same day.
3 Assessment Year: 2009-2010
The learned CIT (A) erred in not considering the fact that the rendering the service are the identical to use of premises.
4. The learned CIT (A) erred in concluding that the issue of allocation of expenses was not a subject matter of the assessment nor the issue was ever raised by your Appellant during the course of assessment proceeding without considering the fact that your Appellant has claimed the same vide letter dated 23-11-2011 which was personally submitted during the course of assessment on 29-11-2011 which was personally submitted during the course of assessment on 29-11-2011. Further the Appellant has claimed proportionate deduction in the Grounds of Appeal filed before the learned CIT (A).
The learned CIT (A) erred in not considering the fact that the Appellant has incurred the expenses of water and common Electricity charges salaries, repairs, lift cleaning and security charges against which a separate recovery of service charges were made from parties to whom the premises are given on rent.
The learned CIT (A) erred in not allowing the claim of your Appellant for proportionate deduction of expenses form the income of service charges as per the direction given by the Hon’ble ITAT vide order dated 20-10-2008 passed under the Appeal No. ITA/3051 to 3053/Mum/06 and no. 7843/Mum/03 in the case of the Appellant for the A.Y. 1998-99, 1999- 2000, 2000-01 and 2001-02 and the facts and circumstances are identical with this case.
7. All the above grounds are without prejudice to one another.
8. Your Appellant prays that:
(a) The deduction of proportionate expenses incurred against respective source of receipts be allowed as per the direction given by the Hon’ble ITAT under the Appeal No. ITA/3051 to 3053/Mum/06 and no. 7843/Mum/03 in the case of the Appellant for the A.Y. 1998-99, 1999- 2000, 2000-01 and 2001-02. 4 Assessment Year: 2009-2010
(b) The Appellant craves leave to add, alter, amend or withdrawal all or any of the above Grounds of appeal herein and to submit statements, documents and papers as may be considered necessary either at or before the hearing of appeal.”
5. Before us, the Ld. Counsel for the assessee submitted that the assessee does not want to contest ground nos. 1 to 7 of the appeal. In view of the submissions made by the Ld. Counsel Ground Nos. 1 to 7 of the appeal are dismissed as not pressed.
6. As regards Ground No. 8 (a) of the appeal, the Ld. Counsel submitted that similar issue has been settled by the ITAT vide order dated 20.10.2008 in assessee’s own case to 3053/Mum/2006 and ITA No. 7843/Mum/03 for the A.Ys. 1998-99 to 2001-02 by setting aside the issue to the file of the AO with the direction to re-compute the total income in accordance with the decision of the Hon’ble Supreme Court passed in CIT Vs. United General Trust Ltd., 200 ITR 488 (SC) and Sabarkantha Zilla Kharid V Sang Ltd. Vs. CIT 203 ITR 1027 (SC). The Ld. Counsel further submitted that the issue involved in this appeal may be restored back to the file of the assessee to compute the income of the assessee as per the directions given by the ITAT in the assessee’s own appeals for the A.Y. 1998-99 to 2001-02.
The Ld. departmental representative did not oppose the submission made by the Ld. Counsel for the assessee.
We have heard the rival submissions and also perused the material placed before us. We notice that in assessee’s own appeals to 3053/Mum/06 and 7843/Mum/03 for A.Y. 1998-99 to 2001-02, the coordinate Bench of the Tribunal has restored the issue to the file of AO for necessary compliance. The relevant portion of the order reads as under:-
5 Assessment Year: 2009-2010 “5. It is not disputed before us that the three items referred to earlier namely a sum of Rs. 7,60,000/- on account of transfer fess, Rs. 10,56,057/- on account of compensation from renting of premises and Rs. 36,070/- on account of penal interest collected from the members are liable to tax and not exempt on the ground of principle of mutuality. As pointed out earlier, all these amounts have been included in the computation of income. As rightly pointed out by the Revenue authorities, the assessee though having included the above amounts in the gross receipts, has claimed deduction of the entire expenses against the receipts. Exemption under section 80P(2)(c) has also been claimed on the gross receipts. The Assessing Officer has observed that the expenditure claimed by the assessee relating to the income which is not chargeable to tax cannot be set off against the taxable income. It has further been held that the assessee is also entitled to deduction under section 80P(2)(c) to the extent of net income by way of interest earned from other co-operative societies. Whereas we are in agreement with the view expressed by the Revenue authorities that deduction under section 80P(2)(c) is permissible to the assessee only with respect to the net income of interest and that the expenditure which relates to income not liable to tax cannot be set off against the taxable income, we are of the view that the taxable income of the assessee has got to be recomputed on grouping of expenditure against respective sources of receipts. In case, it is not possible to bifurcate the expenditure, the Assessing Officer would be justified in apportionment of the expenditure between taxable and non-taxable income on the basis of the following decisions of the Hon’ble Supreme Court:- i) CIT Vs. United General Trust Ltd, 200 ITR 488 (SC) ii) Sabarkantha Zilla Kharid V. Sangh Ltd. Vs. CIT, 203 ITR 1027 (SC).